By ELIZABETH HAYES
Staff Reporter
Century City’s newest, flashiest skyscraper is generating lots of attention among L.A.’s most prestigious tenants before the first shovel of dirt has been moved, before the foundation has been set and a full three years before the 38-story tower on Constellation Place is even scheduled for completion.
Some brokers likened interest in the building to what happens when a new car model comes out. “A lot of my clients are asking questions about it,” said Gary Weiss, senior managing director at Julien J. Studley Inc., who specializes in Century City. “It’s going to be a major event.”
No matter that the building won’t be ready for occupancy until at least 2001, prospective tenants and brokers are calling daily about leasing space, said Stuart Nathan, executive vice president of JMB Realty Corp. of Chicago, which is developing the $250 million high-rise.
“There’s a lot of interest and we’re pursuing a number of different tenant opportunities out there,” he said.
Nathan declined to identify any of the prospective tenants. But other brokers say they expect the new building to be filled with the kind of tenants who have made Century City the preferred corporate address of Los Angeles.
“That is the core business center of the Westside,” said Stan Gerlach, a senior vice president at CB Richard Ellis. “A lot of law firms and business service firms will not consider other locations besides Century City.”
One reason is that Century City has a cachet that downtown does not. And it’s also closer to L.A.’s priciest neighborhoods.
“When you say Century City, it has a connotation of prestige,” Weiss said. “People who make a lot of money are in Century City. They live close by in Beverly Hills and Pacific Palisades. Very few people want to go downtown unless they absolutely have to. They want to stay in Century City because of the proximity to their homes and the prestige.”
The jockeying for space in the new Constellation Place building (which will be the name of the tower until someone shells out big bucks for signage rights) has been heightened by the fact that there have not been any new high-rises built since SunAmerica Center opened about eight years ago.
“There’s very little new construction, and virtually none is in the core areas of the Westside,” Gerlach said. “And there’s tight vacancy now, so there’s every indication there would be great demand.”
Plus, Constellation Place is being designed by Johnson Fain Partners, the same architects who conceived Fox Plaza and SunAmerica Center arguably the two most prestigious buildings in town.
Fox Plaza, whose tenants include Marvin Davis, Ronald Reagan and Twentieth Century Fox, commands lease rates of $42 to $48 a square foot annually.
SunAmerica Center, located just down the street on Avenue of the Stars, comes in just below that, with asking lease rates of $45 to $47 a square foot annually. In addition to SunAmerica Inc., tenants include Bear Stearns & Co. and O’Melveny & Myers.
JMB won’t say what the asking lease rate will be, but almost everyone expects the building to be leased at rates slightly higher than the Fox and SunAmerica towers.
“It’s not going to be cheap,” Nathan acknowledged. “It’s going to be an expensive building.”
Architects say the new tower will be more modern in appearance than either the Fox or SunAmerica buildings. The exterior will have light-colored stone, custom aluminum window frames and blue-green glass. The prime office space will be in “dramatic, blade-like edges oriented to the west and east, which is a metaphor for the cutting-edge character of the corporate and professional firms expected to occupy the project,” said Albert Sawano, associate at Johnson-Fain.
The lobby will be of stone, and there will be an arcade at the bottom of the building and a pedestrian plaza.
The Los Angeles City Council approved construction of the tower in June. Developers are hoping to break ground next year, with construction scheduled to be completed in 2001.
At least one hurdle remains a nearby homeowner group, called the Tract 7260 Association, has filed a lawsuit that challenges the environmental impact report as inadequate. The homeowners have major concerns about the traffic the project could generate, and are seeking corrective measures.
“We’re in settlement discussions with the developer,” said Sean Hecht, a lawyer for the homeowners. “We’re hopeful we can work it out.”
The new tower, which will be across the street from the Century City Shopping Center on what is now a six-acre parking lot, will add 704,000 square feet of space to the currently tight Century City office market.
Several Westside real estate sources predict it will be quickly absorbed. The vacancy rate for class-A space in Century City was only 7 percent at the end of the second quarter, the lowest of any major submarket, according to the Studley Report & Spacedata.
If history is any guide, most leasing activity will come from relocations from within Century City, as various law firms, brokerages and other companies look to move up a notch.
“When you look at the inventory in Century City, there’s a fair amount of functional obsolescence in older buildings. There’s always a market for the newest and shiniest building on the block,” said Gerald Porter, president of Metrospace Corp. “There’s just some benefits to being in a state-of-the-art building, operationally and aesthetically.”
For example, some older buildings in Century City suffer from poor elevator service, inadequate and inefficient heating/ventilation/air-conditioning systems, and don’t possess sufficient electrical capacity for modern offices equipped with personal computers and laser printers, Porter said.
In addition, a number of leases in other buildings will be rolling over in 2000 and 2001, Weiss noted.
JMB’s Nathan said the actual construction timetable will hinge on pre-leasing commitments from tenants. Although construction could begin before all the space is spoken for, Nathan said he is “not going to build with no tenants committed.”
Getting those tenants, however, may take time, according to Brad Cox, senior managing director for the Pacific Southwest with Cushman & Wakefield Inc.
While tenants may be inquiring now, they typically won’t sign on the dotted line until the building is actually under construction, Cox noted. Too many factors, he said, could arise to derail construction.
“Until it starts construction, it’s going to be difficult to lease,” Cox said. “The question comes, is the building going to be built? Is the financing going to be put in place? What is the finished product going to look like? The market trend has been touch and feel make sure it’s going to happen.”
Across town, for example, no tenants have signed on at PacTen Partners’ 24-story Glendale Plaza, which is under construction.
JMB’s Nathan conceded that, ultimately, developers don’t know if the office market will still be hot three years from now. “That’s the development risk,” said Nathan.
The addition of new space is not-so-good news for the second-tier office markets in the Wilshire Corridor and elsewhere, noted Bob Safai of Madison Partners.
“Ironically, if we didn’t build, tertiary markets would benefit greatly,” Safai said.
